ICT Role in 21st Century Education & its Challenges.pptx
Physical verification of asset
1.
2. What are difference between Verification
and Vouching:
Verification :
It Is verified on Balance sheet Items example - Stock
Vouching :
It Is vouching on Profit and loss Items example –
Travelling Expenses
4. PHYSICAL VERIFICATION OF PROCESS
Intimation by auditor to client via mail regarding Physical
verification program showing its date, team members,
procedure etc.
GM forwards the mail to stores
Physical Verification conducted on the decided date by
the respective team
5. PHYSICAL VERIFICATION OF
PROCESS
Based on the physical, a taking report must be prepaid signed
by the members and unit head
Such Report must be compared with the Cash/Stock/Fixed
Asset Register and difference noted along with reasons
Based on differences a Reconciliation Statement must be
prepared
6. PHYSICAL VERIFICATION OF PROCESS
Such Statement must be presented before higher autority like
CFO & ED
After their approval necessary actions to be taken &
adjustments to be made in book
7.
8. PHYSICAL VERIFICATION OF CASH
• CASH:
It is a current asset.
• TYPES:
Main Cash
Petty Cash
Imprest Cash
Suspense Cash
Balance of stamps in hand
9. PHYSICAL VERIFICATION OF CASH
PHYSICAL CASH VERIFICATION BEFORE ACTIVITIES:
Cash physical verification should be on surprise basis.
Freeze the cashier movements from the beginning to end
of physical cash verification.
Monitor his activities, phone calls, in & outs to/from his
pockets, preparing/destroying vouchers
Check for the number of cash books, i.e., petty cash,
Main cash, Factory cash, etc., and in-charge who maintains the
same, possibly from the TB
10. PHYSICAL VERIFICATION OF CASH
PHYSICAL CASH VERIFICATION BEFORE ACTIVITIES:
Cash book printout necessarily from ERP/software,
document with reasons if not printed from ERP/software.
Cash book balance should be obtained ‘as on the date of
the audit’ even if the books were not updated.
Cash book printouts should contain the closing balance
stating dr/cr. i.e, negative balance; on negative balance,
comment on ERP’s control.
Observe the safeness of the cash, i.e., secured place,
locker facility, durable locker, with back up keys available with
senior mgnt,
11. PHYSICAL VERIFICATION OF CASH
PHYSICAL CASH FORMAT:
CASH VERIFICATION PROCESS:
Check that the physical cash balance tallies with the
balance shown by the cash book.
Check that the cash in safe/cash in transit is within the
insurance cover taken.
Unaccounted Vouchers should contain adequate
supporting evidence, with approval.
12. PHYSICAL VERIFICATION OF CASH
CASH VERIFICATION PROCESS:
IOU’s should not exceed 48 hours in time, from the time
of payment, on default; concerned staff’s account needs to be
debited
Suspense cash receipts should be enquired.
Check that signatures of the payee are taken by the
cashier on the cash payment Voucher at the time of making cash
payment.
13. PHYSICAL VERIFICATION OF CASH
CASH VERIFICATION PROCESS:
Enquire for unpaid wages/salaries available in hand not
paid and not accounted as unpaid wages/salary
Avoid phone calls, tea breaks, lunch breaks, or plan
accordingly
Try to do physical verification of cash at the time where
cashier/in-charge would not move out of the work place.
Do not discuss deviations/issues with public or at public
place and with friends/relatives.
14. PHYSICAL VERIFICATION OF CASH
CASH VERIFICATION PROCESS:
Do obtain signature from the client with date as well as
time, do sign the cash verification report with date and time.
Do not attempt to provide photocopy of working paper,
inform to take required details from the working papers if
required by the client.
Get the replies from the cashier for the deviations/issues
in the report.
15.
16. PHYSICAL VERIFICATION OF INVENTORY
INVENTORY:
It is a current asset
Which are held for sale in ordinary course of business
In the process of production for such sale; or
In the form of material or supplies to be consumed in the
production of goods or services for sale (as per AS 2)
18. PHYSICAL VERIFICATION OF INVENTORY
METHOD OF INVENTORY TAKING:
Periodic Inventories - Single Points of Time
Continuous Inventories - Different Points of Time
19. PHYSICAL VERIFICATION OF INVENTORY
PHYSICAL VERIFICATION OF INVENTORY PROCEDURE:
Prior to and/or on the date when we will observe physical
inventories
On the date of our physical inventory observation, tour
the entity's facilities
On the date of our physical observation, perform test
counts of inventories
On the date of our observation, obtain copies or note the
details of the following documents, and determine whether the
items included in them were excluded from or included in the
physical count
20. PHYSICAL VERIFICATION OF INVENTORY
ABC ANALYSIS:
It is a form of inventory control or material cost control; It
is classify them in 3 categories:
CONTROL
Category A Category B Category C
Highly Moderately Least
% of Value 70% 20% 10%
% of Quantity 10% 20% 70%
Control Constant Need Based Little
21. PHYSICAL VERIFICATION OF INVENTORY
BIN CARD SYSTEM:
It is the responsibility of the store keeper to maintain bin
card.
Bin card is maintained inside the warehouse or stores
BIN CARD
22. PHYSICAL VERIFICATION OF INVENTORY
RECONCILIATION OF DISCREPANCIES:
1. Book Quantity Found with Physical Quantity Found
2. Book Quantity Found but Physical Quantity not Found
3. Book Quantity not Found but Physical Quantity Found
23. PHYSICAL VERIFICATION OF INVENTORY
In case of Quantity Excess/Surplus reasons:
Where materials are not issued from the stores, but the
entry of issues of posted.
Where the amounts of materials issued is less than the
quantity for which entry issue is made
Where no issues are made but only issue entry is made in
the stock record.
24. PHYSICAL VERIFICATION OF INVENTORY
In case of Quantity Short/Deficit reasons:
Excess physical issue than the actual issues entries posted
Issue made but corresponding entries not made in issue
column
Issue of materials without requisition
Misappropriation
Defective instruments
25.
26. PHYSICAL VERICATION OF FIXED ASSET
Tangible assets are physical things that you
can touch - in the case of a business this might be machinery,
buildings, land.
27. PHYSICAL VERICATION OF FIXED ASSET
TYPES OF FIXED ASSET
Tangible Asset Intangible Asset
Land & Building Patents
Plant & Machinery Copyrights
Furniture & Fixtures Trademark
Office Equipment
Vehicles
28. PHYSICAL VERICATION OF FIXED ASSET
STEP OF PHYSICAL VERIFICATION OF FIXED ASSET:
Understand the client procedure
Obtain Fixed Asset Register as maintained by the client
Vouching of Additions to Fixed Asset
Decision of Sample
Checking Bills
Assets on Lease
Imported Assets
Other Aspects for checking
29. PHYSICAL VERICATION OF FIXED ASSET
STEP OF PHYSICAL VERIFICATION OF FIXED ASSET:
Vouching of Deletion from Fixed Asset
CARO-Whether Disposal affect the Going Concern
Decision of sample
Checking of Sales bills of Disposal
Depreciation and Amortization
Revaluation
30. PHYSICAL VERICATION OF FIXED ASSET
The following are the documents which can be examined by
the auditor in this regard:
Check on Asset Code mention or not
Location
Classification & Item Description
Model/Serial Number/Make
Major technical specs if details of available
Year of manufacturing with available
31. PHYSICAL VERICATION OF FIXED ASSET
Usable/Not Usable
Present running condition
Addition made or not if yes details
Transfer from details
Send to document details
Any other details
32. PHYSICAL VERICATION OF FIXED ASSET
Vehicle List details:
Check on Vehicle Number
Check on Engine Number
Check on Chase Number
Check on Insurance of Vehicle
Check on Registration Certificate and Driving Licenses
33. PHYSICAL VERICATION OF FIXED ASSET
RECONCILIATION OF DISCREPANCIES:
1. Book Quantity Found with Physical Quantity Found
2. Book Quantity Found but Physical Quantity not Found
3. Book Quantity not Found but Physical Quantity Found
